Plans would have restarted the town's New Squares project
A supermarket has hit back at a decision made by council officers in Cumbria who deemed its plans too risky.
Sainsbury's had submitted plans to build a new store in Penrith, forming the backbone to the delayed multi-million pound New Squares development.
But Eden District Council officers recommend that the plans pose risk of a potential legal challenge based on rulings by the European Court.
Sainsbury's said it will now "turn its attention" to other Cumbrian towns.
Paul Miller, regional development surveyor at Sainsbury's, said: "As a result of last minute advice sought by the council, which is contrary to our own, unfortunately Penrith will now be subjected to at least six years of uncertainty and a significant financial burden whilst an alternative scheme, no doubt still anchored by a supermarket, is found."
He said they had always remained confident that the scheme was the best possible option for Penrith and any legal challenge could be easily defended.
He added: "Meanwhile, we have been left with no choice but to turn our attention to other towns in Cumbria that could benefit from our investment."
Supermarket chiefs had hoped to build either a 78,000 sq ft or 90,000 sq ft store in Penrith.
The plans would have restarted the town's New Squares project, which was halted due to the financial crisis.
If councillors agree with the recommendation made by Eden District Council officers, the supermarket will still have the opportunity to express interest to develop a smaller store.
The issue will be discussed at a special council meeting at the North Lakes Hotel in Penrith on 8 December.
The original £77m New Squares development plan included four new town squares, a superstore, flats, bars, restaurants and sports facilities.
Developers, Lowther Manelli, mothballed the scheme in October 2008 after the National Australia Bank said it would no longer fund the project due to "commercial reasons".